By David Morgan
WASHINGTON (Reuters) - Three prominent Republican senators on Monday called for replacing Obamacare with a package of election-year proposals intended to lower health insurance costs while retaining some elements of President Barack Obama's health reform law.
Senators Richard Burr of North Carolina, Tom Coburn of Oklahoma and Orrin Hatch of Utah released a legislative blueprint that analysts say could help the Republican Party offer a much-needed vision for healthcare ahead of November's mid-term congressional elections, voting that will determine which party controls Congress in the final two years of the Obama presidency.
The proposals came a day before Obama is scheduled to defend his top domestic policy in his State of the Union address on Tuesday night.
"The American people have found out what is in Obamacare - broken promises in the form of increased healthcare costs, costly mandates and government bureaucracy. They don't like it and don't want to keep it," Burr said in a statement.
Obama's Patient Protection and Affordable Care Act has extended health coverage to millions of people, despite a botched October rollout. The administration says 6.3 million people have signed up for private insurance as a result of implementation. A similar number have been determined eligible for Medicaid coverage.
The Republican alternative - dubbed the Patient Choice, Affordability, Responsibility and Empowerment Act, or CARE Act - would repeal Obamacare's mandates, taxes and fees and replace the law with what aides called "common-sense, patient-centered" reforms intended to lower costs.
As with earlier Republican initiatives, the approach would address costs by making consumers responsible for more of their medical bills, with assistance from health savings accounts funded with pre-tax dollars that could be used to pay for insurance premiums as well as healthcare services.
The plan would keep in place two popular Obamacare provisions by banning lifetime limits on insurance benefits and allowing adult children to stay on their parents' health plans until age 26. It would scale back Obamacare subsidies to help lower-income people buy private insurance, allow insurers to charge older people more and protect the sick against insurance market discrimination only if they remain continuously insured.
Medicaid, the program for the poor, which Obamacare would expand to Americans with incomes of up to 138 percent of the federal poverty level, would be limited to mothers, children and the frail. Federal payments would be capped but states would receive greater flexibility to run their own Medicaid programs.
Funding for the CARE Act would come mainly from new federal taxes on employer-sponsored health plans, which are currently excluded from taxation. The Republican proposal would make 35 percent of a plan's value taxable for employees but keep employer tax deductions unchanged.
At the same time, it would leave in place as estimated $700 million in reduced payments to Medicare, while lawmakers seek a separate bipartisan agreement on how to reform the program for the elderly and disabled.
The White House was dismissive. "This looks very much like just another repeal proposal, another attempt to raise taxes on the middle class, to keep uninsured Americans with pre-existing conditions locked out of the market, to raise costs on seniors and to take away Medicaid from the millions of Americans," White House spokesman Jay Carney told a briefing.
But analysts said the proposal could help Republicans in the coming months.
"It gives them an opportunity to talk about these things in a more positive way than just repeal and replace," said Joseph Antos of the American Enterprise Institute, a conservative Washington think tank.
Republicans have already made Obamacare a major campaign issue in hopes of leveraging the law's unpopularity into active voter support in November. Republicans voted to repeal, defund or dismantle the law more than 40 times in the House of Representatives.
Of likely U.S. voters, 43 percent view Obamacare at least somewhat favorably, while 52 percent have an unfavorable view, according to a Rasmussen Reports poll released on Monday.
But there is no consensus on how to replace the law and party leaders believe it important enough to offer a positive vision that House Republicans have made it a major topic for their annual retreat this week.
(Additional reporting by Roberta Rampton; Editing by Steve Orlofsky)